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Britain’s FTSE 100 wobbled on Wednesday morning as Spain slid into recession, reigniting eurozone fears, and after RSA Insurance shares lost value following a downgrade.

The benchmark UK index of blue-chip shares added 0.11%, or eight points, to 5,875 and the Mid-250 index took on 0.4%, or five points, to 11,716. See the FTSE’s performance.

RSA Insurance hit

RSA Insurance Group (RSA.L) fell 5.5p, or 4.8%, to 110.3p as dividends of 5.8p were paid out and analysts at Panmure Gordon downgraded the stock from ‘hold’ to ‘sell’ and reduced their target price from 110p to 99p.

The group’s management had a shake-up last year when Andy Haste stepped down as chief executive after eight years in the role, during which time he reversed the group’s fortunes.

Concerns about Spain and Italy

European stock markets also traded with caution as official figures showed that Spain has lapsed back into recession.

Michael Hewson, senior market analyst at CMC Markets, said: ‘After the Bernanke-induced gains of the early part of the week European markets look set to open lower this morning as a sense of proportion returns to the markets, and concerns about Spain and Italy’s fiscal outlook return.

‘Concerns about Spain continue to dominate after data showed that the economy was slipping back into recession in 2012, while the government remained committed to slashing spending across the board in an attempt to meet Brussels targets of a deficit of 2012 of 5.3% of GDP.’

European stock markets made small gains: Germany’s DAX index added 0.13% to 7,088, France's CAC 40 index ticked up 0.18% to 3,476, and the FTSEurofirst 300 index of top European shares took on 0.14% to 1,085.

MarkY - exactly. The closing price yesterday was about 116p and the dividend paid represents about a 5% return to anyone who bought yesterday (before today's ex-div date kicked in).

So, the price has fallen a bit more than that (about 6.4% at the time of writing), but well within the usual boundaries. Looked at another way, the downgrade has had marginal effect at best, which is in keeping with the increasing tendency for markets to disregard ratings agencies and brokers' puffs/de-puffs - and I'm not one of those "hang the agencies high" types, either. They get a lot wrong, but I understand why they have to exist.

I also think it odd that Panmure would downgrade on Monday with the knowledge that the div on Wednesday would knock 5.82p off the sp in any case. Is it to make them look competent I wonder? This is the same company that upgraded LAD from sell to buy on Monday and from 118 to 183 when the sp was at 163! I mean, who are they kidding? Perhaps if they had recommended buying LAD at 118 in October last year rather than sell (the price was....you guessed it, 118,) then we might be a little more impressed...Muppets!

Yes, JeremyFry, but the whole market has retreated as well (and cerrtainly from when I first made the comment) so as you say, within the usual boundaries. I prefer not to take much notice of brokers comments unless they are all broadly in line with each other which they rarely are. Unfortunately, journalists do!

Yes, and the price now (about 107 as I write) is no lower than it was in late February, before it started its upwards trend towards the ex div date. I am optimistic that it will recover ground again soon, and since it pays two good didvidends a year there's usually something to look forward to...

So Mr Cornes has previously made ridiculously optimistic forecasts about next year which he now decides to cut but still thinks that RSA, one of the highest yielding FTSE shares will still raise its dividend by 2.5% giving a yield approaching 9%, which by implication is safe. Yet the shares are a sell. I shall certainly keep mine. What planet is this guy on? Do any of the fund managers take a blind bit of notice of such rubbish?